Listen to: Hull on Estates #325 – Top Cases of 2012
Today on Hull on Estates, Stuart Clark and Natalia Angelini discuss two of the most interesting cases of 2012 - Rasouli v. Sunnybrook Health Services Centre and another case dealing with proprietary estoppel.
If you have any questions, please email us at hull.lawyers@gmail.com or leave a comment on our blog page.
With the growing population of older Canadians we also face increasing numbers of people with dementia, and with that families who are likely anxious of the risks of their loved ones going missing. I can appreciate how scary this must be, and given the statistics – three out of five people suffering from dementia go missing – it is no wonder that the Alzheimer Society of Ontario is taking action.
The Alzheimer Society of Ontario reportedly unveiled a new government-funded education program this week aimed at preventing wandering. The new project called “Finding Your Way” features a website - www.FindingYourWayOntario.ca – with downloadable “safety kits” that include instructions on how to prevent wandering and how to respond when someone goes missing.
Importantly, the Alzheimer Society of Ontario is also extending help to ethnic minorities who may otherwise not access relevant information due to language barriers, by launching public service announcements and online information in several languages.
Thanks for reading and have a great weekend,
Natalia Angelini
As a recent article in The Lawyers Weekly (March 15, 2013 issue) reminds us, the 21-year rule operates by deeming a trust to have sold its property on the day that is 21 years after the trust’s creation, and every 21 years thereafter, at a price equal to fair market value. The trust is then deemed to have acquired that property at the price equal to the deemed selling price, which then becomes the cost of that property for subsequent deemed or actual dispositions.
There are certain exceptions to the 21-year rule. Planning techniques have also developed to offset the potentially significant tax burden resulting from application of the rule.
However, the article addresses the difficulty when certain terms governing a trust, as set out in the trust document itself, create obstacles in the way of such planning techniques. In that regard, the Kanji v. Canada (Attorney General) decision is cited, where the settlor of the trust was also a co-trustee and beneficiary, thereby giving rise to an “attribution rule”. The application of this rule resulted in the inability of the trust to distribute its property to certain of the beneficiaries on a tax-deferred basis.
Unpleasant 21st anniversary tax surprises may be deferred or avoided if dealt with in a timely manner, and a tickler system to remind ourselves of pending deadlines a couple of years in advance may be useful.
Thanks for reading and have a good day,
Natalia Angelini
Where a person wishes to make a gift by will but keep the recipient and the nature of the gift away from public scrutiny, the testator could leave such a gift to a third party to hold on a secret trust for a beneficiary.
The essentials of a secret trust created by equitable principles are:
· the intention of a testator to benefit secret beneficiaries;
· communication of the trust to the beneficiaries/trustee; and
· express or tacit acceptance of the trust by the beneficiaries/trustee.
Whether or not a trust exists depends on the three certainties, being:
· the words must be so used that on the whole they ought to be construed as imperative;
· the subject matter of the trust must be certain; and
· the objects or intended beneficiaries must be certain.
A trust of this nature, not reduced to writing to constitute a Will, brings with it many difficulties. Some of these are:
· proving that a trust exists, the onus of which is on the person alleging the existence of a secret trust;
· determining whether the trust forms part of the testator’s will; and
· the danger of a named trustee using the trust property for him/herself.
Secret trusts are rare, and not an instrument I would recommend clients contemplate unless properly papered.
Thanks for reading and have a good day,
Natalia Angelini
I am obsessed with mastering Parchesi (great board game that I highly recommend to those of you who still play!). I play weekly, and I can't even fathom risking something more than my next move on a roll of the dice, which is why the real-life story of a man who thought up having his nieces and nephews play Monopoly, with the winner getting his fine antique furniture, threw me for a loop. Another gentleman reportedly directed in his will that the winner between his nephews in a dice throw would get his palatial home in the tropics. One lucky nephew won, and the will was upheld in court.
These testators' wishes represent comical (at least for the winners) and extreme scenarios. Below I highlight some of the more common methods of gifting (usually of personal property) the author in the article mentions:
1 - Say nothing, and your executor will distribute in accordance with his/her discretion;
2 - Write your list of items and who they go to in your will or in an appendix thereto;
3 - Implement a rotating pick system (eg. Each beneficiary gets a number and picks when it is his/her turn until all items have been selected); and
4 - Direct the beneficiaries to get together and agree on who gets what, with the executor having the final say.
Thanks for reading and have a great weekend!
Natalia Angelini
As part of Canada Revenue Agency’s increased focus on tax compliance for trusts and estates, in the last couple of years it has made the following additions to its compliance program:
· Ontario Region Trust and Estates Coordinator – the person in this position is tasked with, among other things, coordinating and prioritizing the estates and trusts related tax issues that concern the province;
· Regional Trust Team – this team is engaging in substantial audit activity in the Golden Horseshoe region, concentrating on Mississauga, Hamilton, Kitchener, London and Windsor; and
· Related Party Initiative – this initiative focuses on high net-worth persons with net assets of $50 million or more, and who have 30 or more related economic entities (including trusts, corporations, partnerships, joint ventures and private foundations).
We can expect an increased number of CRA trust audits. It would seem given the decision in Antle v. Canada (where a trust was deemed invalid) that auditors will be concerned with the particulars of how a trust was set up. They will also look to whether it is being properly maintained (e.g. that tax filings are being done in compliance with the legislation).
This is something to keep in mind for estates and trusts lawyers, especially since CRA may perform reassessments that could result in additional tax, interest and penalties.
Thanks for reading and have a good day,
Natalia Angelini
There has been much written on the accounting duties of attorneys, and several cases address the issue. One such case may be helpful to those attorneys who find themselves being called to account by third parties notwithstanding that the grantor of the power of attorney is mentally capable and has not requested any accounting.
In Koperniak v. Wojtowicz the applicant was the grantor’s daughter, who made accusations regarding the attorneys’ management of her mother’s financial affairs. The attorneys were the grantor’s sons, and there was evidence that the grantor was content to have them handling her financial affairs.
The Court considered the evidence and the applicable legislation (s. 42(4) of the Substitute Decisions Act) that lists the persons who may apply to have attorneys pass their accounts. Despite the basket clause that states “any other person, with leave of the court” can apply to have attorneys’ accounts passed, the Judge did not agree that leave ought to be granted in this case, particularly as the grantor was capable and able to confirm her wishes, and as no evidence was found to have been advanced displaying the necessity to pass accounts. While the brothers had used their powers to sign a small number of cheques, the Judge held that this fact did not automatically give rise to an entitlement to a passing. Accordingly, the application was dismissed.
You will be able to find more on this case and other topics covered at our firm’s recent breakfast series.
Thanks for reading and have a good day,
Natalia Angelini
Listen to: Hull on Estates Episode #315 – New Year’s Resolutions for the Legal Practitioner
Today on Hull on Estates David Smith and Moira Visoiu discuss New Year’s resolutions for legal practitioners. Specifically, they mention the December 2012 issue of LAWPRO Magazine. A few of the best practices mentioned include the use of checklists and time management tools as well as tips for thorough documentation.
Please email hull.lawyers@gmail.com or leave a comment on our blog if you have any questions.
Click here for more information on David Smith.
Click here for more information on Moira Visoiu.
Listen to: Hull on Estates Episode #311 – Beneficiary Designations When a Will Is Revoked
This week on Hull on Estates, Paul Trudelle and Holly LeValliant discuss beneficiary designations when a will is revoked. More specifically, they discuss a recent decision made by the Ontario Superior Court of Justice: Petch v. Kuivila, 2012 ONSC 6131 (CanLII).
If you have any questions, please email us at hull.lawyers@gmail.com or leave a comment on our blog.
Click here for more information on Paul Trudelle.
Click here for more information on Holly LeValliant.
Listen to: Hull on Estates Episode #310 – Guardianship and Capacity Issues
Today on Hull on Estates, David Morgan Smith and Nadia Harasymowycz discuss guardianship and capacity issues in circumstances where incapacity is a distinct possibility, but not currently the case.
If you have any questions, please e-mail us at hull.lawyers@gmail.com or leave a comment on our blog page.
Suzana Popovic-Montag presented an excellent paper on accounts at the October 18, 2012 Hull & Hull LLP Breakfast Series, and I made special note of her comments on adjusting compensation awarded. Some occasions that adjustments are appropriate are:
· increase - when a care and management fee is charged on an annual basis (usually 2/5 of 1% on the gross value of the estate), which is properly sought where the estate or part of it, is to be held in trust and not distributed to the beneficiaries within the executor’s year;
· increase - when a special fee is claimed by the executors, where the administration is extraordinarily complex or time-consuming; for instance, when the estate has been involved in litigation, where the executors were required to operate the deceased’s business, or where the executors were required to deal with new legislation;
· decrease – when transfer are made in specie or are simple transactions;
· decrease - where an executor retains another to act as an agent to perform duties, the agent’s fees should be deducted;
· decrease - where a trust company is retained on an agency basis to administer an estate or trust, fees paid to the trust company ought to be deducted;
· decrease - where a solicitor performs executor’s work, the fees relating thereto ought to be deducted; for example, when the solicitor compiles an inventory of estate assets, keeps accounts, pays bills, makes investments, or opens estate accounts;
· decrease – where the estate’s accountant prepares income tax returns, the fees relating thereto should be deducted (although some case law says this should be decided on a case by case basis);
· decrease - the costs for preparation of accounts in court format for a passing of accounts ought to be deducted; and
· decrease - compensation charged on disbursements to an executor/solicitor for legal services provided by him or her ought to be deducted.
You can find a much more fulsome commentary on this and other account issues in the paper itself, which will be posted on our website.
Thanks for reading and have a great weekend!
Natalia Angelini - Click here for more information on Natalia Angelini.
The legislation in Ontario requires that (aside from a Holograph Will or a Will of a member of the Canadian Forces on active service) a Will must be signed at its end by the testator or by some other person in his/her presence and by his/her direction, the signature must be made in the presence of two attesting witnesses present at the same time, and two or more of the attesting witnesses must also subscribe the Will in the presence of the testator.
As in most cases these requirements are adhered to, this is not the most common ground upon which to support one’s challenge to the validity of a Will. However, two English cases contain interesting commentary of the subject.
In Esterhuizen v. Allied Dunbar Assurance PLC [1998] 2 FLR 668, the lawyer attended at the testator’s house three times to attempt to get the Will signed, but was unsuccessful. The testator was extremely reclusive, and could not organize to have any witnesses to the Will on hand. The Court found that a solicitor owes a duty to take proper care in advising the testator as to the formalities of execution, and a lawyer needs to do more than leave written instructions for the client. Rather, the Court stated that a lawyer ought to invite the client to his office to sign the Will there or visit the client with a staff member at home to have it executed.
In Gray v. Richards Butler [2000] WTLR 143, the client was departing the next day for a holiday and the lawyer met her at a restaurant that night to attend to the execution of the Will. However, as the client was enjoying the evening out and did not wish to sign at that moment, he left the Will with a set of standard instructions for her to execute and return to him. The Will was returned with deficiencies, including signatures in the wrong place, and the witnesses were not both present at the same time for the signing. The testator was treated as having assumed responsibility for the errors given that the solicitor made what the court viewed to be reasonable efforts to ensure due execution was observed.
While these cases have very different outcomes, in my view they serve as reminders that the best practice for drafting lawyers in order to make due execution a non-issue is to have the Will signing process entirely supervised and presided over by them.
For more on this topic, David Smith's paper and presentation given at our recent Hull & Hull LLP breakfast series will be posted on our webiste.
Thanks for reading,
Natalia Angelini - Click here for more information on Natalia Angelini.
The traditional manner of distribution looks like this - a couple owns their home together as joint tenants, such that when one parent dies it goes to the other spouse by right of survivorship. When the remaining parent dies, all that wealth goes to the kids.
Entering into a second marriage can put this natural progression of ownership into question. With second marriages becoming more main-stream, one of the most contentious types of cases I see involves children from the first marriage battling with step parents over this asset. The Financial Post’s recent article on estate planning speaks to how your home gets treated on death, and the author notes the following about joint ownership and second marriages:
· Owning property as joint tenants to avoid probate fees (such fees are not significant in the grand scheme of things) is not always worth the consequences. Learn about the risks before you do it.
· A better option may be tenancy-in-common ownership, where the couple chooses the ownership split on a property. Each parent can then have their share of the property go to whoever they want, including children from a previous marriage. This can also protect the children in situations where the surviving stepparent changes his/her will so as to disinherit them from their natural father or mother’s assets.
· If you take care of your spouse, you can avoid other problems - in Ontario, there is legislation that allows your spouse to elect to make an equalization claim instead of accept what was given to him/her under the will.
· Allowing the surviving partner a right for a finite period of time (e.g. two years) to find replacement living arrangements is usually best for everyone.
· Consider such things as maintenance, taxes and other costs associated with a home to avoid problems that may otherwise be unavoidable if the deceased partner did not plan well and left enough liquid assets to allow the surviving partner to pay the regular upkeep and real estate taxes.
Thanks for reading and have a great day,
Natalia Angelini - Click here for more information on Natalia Angelini.
An unusual and admittedly morbid article peaked my interest this week, which reviewed a US study about death row inmates’ choices for their last meal. The results indicate unsurprisingly that comfort foods and fried foods are most popular, with meals tending to be high in calories and heavy on meat. French fries, soda, ice cream, hamburgers, chicken, steak and pie seem to be the most commonly requested items.
The average meal request apparently came in at an estimated 2,756 calories, more than a typical grown man needs in a whole day. Fruits and vegetables were requested much less often, though more than a quarter asked for salad.
It is reported that lead researcher Brian Wansink, who directs the Food and Brand Lab at Cornell University in Ithaca, N.Y., said the popularity of comfort foods and name-brand products like Coca-Cola could reflect people trying to deal with extremely high stress by surrounding themselves with familiar food. "In some ways, this might be a way to bring the level of stress and negative excitement down to something that's something a little bit more manageable," Wansink said. "You don't find people going for Neapolitan ice cream or for Chunky Monkey or Chubby Hubby. They go for chocolate; they go for vanilla."
Researchers note that some of patterns, like the limited number of vegetarian meals, could reflect the socio-economic backgrounds of people on death row. In addition, the fact that most death row inmates are men is a factor to take into account.
I have never really thought about what I would want to eat for my last meal. Considering it now, I would imagine that facing imminent execution would make me lose my appetite, so I am not surprised to see that several inmates (more than 50 of the almost 250 people studied) chose to forego a last meal altogether.
Thanks for reading and have a great weekend,
Natalia Angelini
We turn to medical experts in estate litigation to assess clients for capacity to make Wills and Powers of Attorney. We also rely on medical records, particularly in Will challenges, to give us a picture of the deceased’s mental abilities at and around the time instructions are given to a lawyer to prepare testamentary documentation and at the time it is executed.
By reviewing these records and examining these doctors as witnesses, we can learn a lot about a testator’s mental state (and, importantly, one’s mental deficits) at the material time. It often stands out to me when someone’s driver’s licence is revoked due to their cognitive decline (see our previous blog on this topic), as I have often seen such notes in medical files indicating the testator’s extreme displeasure with this restriction on his/her ability to drive – it seems to cut to the core of one’s feeling of being independent and self-sufficient.
While we deal with physicians to the extent described above, I haven’t seen situations where the physicians are actually brought into the lawsuit. In the US, however, recently it was reported that an Orange County jury found that the doctor of a dementia patient bore no responsibility for a car crash the 85-year-old woman caused that killed her longtime partner.
The family of the man killed in the crash sued the doctor for wrongful death, pleading the physician should have taken steps to have the driver's license revoked.
The author rightly notes that the case highlights a problem that will grow more common as the population ages and doctors see more dementia and other conditions related to old age. I would imagine that it would be difficult, particularly in the early stages of dementia, for these assessments to be accurately made. We may start seeing doctor’s being assessed on whether they have made the right decision when deeming a patient fit to drive, particularly in circumstances as tragic as this case.
Thanks for reading and have a great day,
Natalia Angelini - Click here for more information on Natalia Angelini.
Nothing puts a halt to an estate administration as fast as a lawsuit challenging the validity of the testator's Will. The effects of this can add strain and be emotionally draining for those who have recently lost their loved one.
What can be particularly difficult is if the challenge is commenced before the funeral arrangements for the deceased have been carried out. Since the commencement of such a challenge effectively suspends the appointment of an estate trustee, he/she has no authority to take administration steps, including proceeding with the funeral. This can lead to the deceased remaining in limbo for a significant period of time.
While I have rarely seen this occur, this is what has reportedly happened in respect of the estate of famed actor Sherman Hemsley. The man who claims to be Hemsley's brother is asking for custody of his remains and possessions. The result is that more than one month has passed since his death, and he remains embalmed under refrigeration while a court decides the issue.
In this type of circumstance, it would seem to be critical to get the matter before a court quickly in order to have an estate trustee during litigation (ETDL) appointed, so the funeral and other necessary administration steps can proceed on the ETDL's direction without significant delay.
Thanks for reading and have a good day,
Natalia Angelini - Click here for more information on Natalia Angelini.
The Herricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre) decision of The Court of Appeal for Ontario, released last week, is an Appeal from an Order fixing the fees the Appellant law firm could charge to a client under disability.
The action stemmed from tragic events, whereby the client fell from a catwalk while attending a concert at the premises of the Defendant. She sustained personal injuries, including a severe traumatic brain injury. The Office of the Public Guardian and Trustee (PGT) was appointed the client’s Guardian of Property. The PGT entered into a contingency fee agreement (CFA) with the Appellant in respect of the litigation.
The Action was settled at mediation, and the fees were fixed at the approval Motion. The payment that would have been made to the Appellant under the CFA was significantly greater than the amount ultimately Ordered by the Motion’s Judge.
The matter went before the Court of Appeal. The Court of Appeal helpfully noted that when a lawyer seeks to enter into an enforceable CFA with a party under disability, the lawyer shall: (a) apply for approval of the CFA before it is finalized; or (b) include the CFA as part of the approval motion/application or a consent Judgment under Rule 7.08. I like that this gives counsel a choice to have the CFA approved at the outset, which would diffuse any issue of fairness being raised at the end of the day.
As in this case the CFA was to be assessed on the approval Motion pursuant to Section 24 of the Solicitors Act, the Court of Appeal appropriately cited its decision in Raphael Partners v. Lam as setting out a two-step process where enforcement of a CFA is sought, being: (1) the fairness of the agreement is assessed as of the date it was entered into; and (2) the reasonableness of the agreement is assessed as of the date of the hearing. A CFA can only be declared void, or be cancelled or disregarded, where the court determines it is unfair or unreasonable.
The Court went on to succinctly cite the tests for fairness and reasonableness, and conduct an analysis in respect of the case at hand. It allowed the Appeal and found that the Motion Judge erred in failing to consider whether the CFA should be enforced, and by proceeding directly to the determination of the amount of fees (time spent and hourly rates) without regard to the CFA.
Have a good day,
Natalia Angelini - Click here for more information on Natalia Angelini.
In the July 6, 2012 issue of The Lawyers Weekly, specific mention is made of 1318214 Ontario Limited v. Sobeys Capital Incorporated, a case where The Honourable Justice David Brown discussed the reality of allocating scarce judicial resources to parties seeking late-stage summary judgment motions. His Honour points to the time-consuming nature of such motions, which take a significant amount of time for a judge to consider before and after the hearing. It appears that trial dates are languishing while litigants prefer to proceed with a summary judgment motion.
Since the relaxation of the summary judgment Rules, these types of motions are on the rise. But if the motion is unsuccessful, it is difficult to see the benefit for the parties and the judicial system. The result is that a lot of resources have been consumed without a tangible result.
In the Sobeys case Justice Brown gives some guidance to us about when it is appropriate to bring a summary judgment motion:
“…The principle of Proportionality of Rule 1.04(1.1), when coupled with the reality of scarce judicial resources and the risk that the motion might not end the action, impose on a party wishing to schedule a one day or longer Post-Discovery summary judgment motion an obligation to demonstrate, at a scheduling conference, that the benefits of allowing such a motion to proceed outweigh the risks that the motion might fail, thereby saddling the parties with an unnecessary layer of additional litigation costs.”
This ruling follows the principle laid down by the Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch that we addressed in a previous blog.
Thanks for reading,
Natalia Angelini - Click here for more information on Natalia Angelini.
Applying for an administration bond can be a trying experience. Guarantee or bonding companies require detailed information to process the application, and delays may result from follow-up inquiries. Below is some information that may assist.
Amount - double the amount of the assets as attested to in the application for probate. Various circumstances have been considered sufficient to justify a reduction in the amount of the bond. However, where infant beneficiaries are involved the usual bond is normally required.
When Needed - where an application for a certificate of appointment without a will is made; where the deceased died with a will, but did not name an executor; where the named executor does not reside in Ontario; where the applicant is a succeeding estate trustee without a will.
When Not Needed - when, on an intestacy, the surviving spouse applies for a certificate of appointment, the value of the estate does not exceed the preferential share and an affidavit is filed setting out the debts of the estate;when a trust corporation is appointed as estate trustee; when you get a court order dispensing with the bond requirement.
Who Can be a Surety -specifically prohibited are registrars and solicitors, as well as minors. If the surety is an individual he or she must be resident in Ontario.
Requirements –there are no specific legal requirements. Full disclosure of estate assets and liabilities, as well as personal liabilities, are generally considered to be a minimum requirement.
Lifespan - the bond generally remains in the custody of the Court until cancelled (e.g. upon the passing of their final accounts or where an executor produces evidence to the satisfaction of the judge that the debts of the deceased have been paid and the residue distributed.
Thanks for reading and have a great weekend!
Natalia Angelini - Click here for more information on Natalia Angelini.
p.s. for a more fulsome discussion on this topic, I refer you to my paper The Tricky Business of Administration Bonds
My mom is a huge Elvis Presley fan, so I couldn’t help but blog on an article advertising the auctioning of his Tomb.
Reportedly, celebrity auctioneer Darren Julien is selling Elvis’s original crypt as part of his “Music Icons” auction. The tomb is located inside the granite and marble mausoleum at the Forest Hill Cemetery in Memphis, Tennesse. A photo of the original tomb is posted in case you are interested!
Presley was interred there alongside his mother, Gladys. Two months after his death, they were apparently re-buried at his Graceland home, and the original crypt remained empty.
The article boasts that the winning bidder from the auction beginning June 23, 2012 stands to receive the crypt, opening and closing of the vault for burial, a memorialization inscription and use of a chapel for a committal service (transportation and funeral home charges not included).
This is a great find for a die-hard Elvis fan. I can only imagine what the buyer will spend on this gem!
Have a good day,
Natalia Angelini - Click here for more information on Natalia Angelini.
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